Negotiating Deficiency is Key in a Short Sale - Loan Modification Forum

Moe Bedard · 08-17-2008, 10:48 AM

Negotiating Deficiency is Key when atempting a short sale:

With a short sale, the lender has three possible ways to handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home.

First, the lender can attempt to collect the deficiency balance from the seller after the property has closed.

Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt.

Third, the lender may agree to cancel the entire deficiency balance.

You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection.

It is wise to consult with an Attorney or Real Estate Agent who is familiar with Short Sale negotiation and has significant experience working with lenders. Keep in mind that Attorney’s fees or Realtor fees come out of the lender’s net proceeds, therefore, you should not have to pay out of your own pocket for an Attorney or Realtor to assist you with the transaction.

Enrique · 08-20-2008, 10:22 PM

Moe,

I've hired a lawyer to help me with the negotiation of the settlement of the debt. I didn't know that the lender would pay for this. How does this work? I was expecting him to send me a bill.

Enrique

Moe Bedard · 08-21-2008, 04:56 PM

Hello Enrique,

This can be billed to escrow when the home sales as a cost of selling the home and listed on the final closing statement ie: HUD. It depends on how your billing is set up with your lawyer. Maybe he is billing you in advance on fees? Hopefully, it's taken out at the sale.

Enrique · 08-21-2008, 08:23 PM

Thanks Moe. I'll have to look more into how to get the lender (BofA) to foot that bill. I've already forked out $1000 to the lawyer. Mabye I can get reimbursed.

I have another question for you. In your post about short sales you say

"You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection."

I am right at this crucial step in my short sale and I feel much uncertainty. The bank's offer to me for both the 1st and HELOC is to agree to release the lien and charge off the remaining debt as a collectable balance. Is this the situation you are talking about... that they are not forgiving the personal debt? They're giving me until 9/12/2008 to sign the agreement or the offer ends.

-- Unsure and somewhat confused

Moe Bedard · 08-23-2008, 10:32 AM

No problem Enrique!! My pleasure.

Yes, this is what I am talking about (release of lien in exchange for a new personal debt). If you sign this they may be able to go after you for this balance which may include wage garnishments. Your attorney hopefully will do his due diligence and properly advise you to your rights.

Best of luck!

Enrique · 09-07-2008, 10:04 PM

Well my lawyer sent a letter to each BofA department, one for the 1st and one for the HELOC. This was 2 weeks ago and there's been no response. I don't think they are going to settle the debt. I've pretty much lost hope for a short sale with BofA. It is very frustrating. :-(

ShortinPA · 10-10-2008, 09:55 PM

Enrique,

I am in your same exact situation. Would you please post as to how you are doing, and what has happened the past month with your Bank of America situation?

Much appreciated!
-ShortinPA

Enrique · 02-05-2009, 02:31 PM

I didn't post what happened, but I mentioned it in another thread the other day.

Basically, my lawyer wrote BOFA asking for clarification on what their intent was in their offer to me. BOFA never responded so I didn't feel confident in signing the letters. I am thinking now that I should have because I'm still in a tough spot with taxes due in April... I think I'm either going to walk away or attempt another short sale.

sirkjeff · 02-26-2009, 10:32 AM

Moe,

Thanks for the site, I called country wide about doing a short sale. Ive been trying to sale the property in florida for over 2 years. it is consider a second home. Do you know of any attorneys in Tampa ? That can help with the short sale?

Moe Bedard · 02-26-2009, 12:26 PM

sirkjeff,

You would need to go the the Florida Bar Association attorney referral for a Real Estate attorney..............

or

www.naca.net

Bridget Ann · 03-18-2009, 10:18 AM

Hi Moe,

I have just received approval on a short sale with Washington Mutual. I had to move and I was trying to sell my house for a year and now it is finally going through at the end of this month.

However, on the approval it says that Washington Mutual will accept $125k on the 2nd. Then the seller will need to contact the Recovery Department to work out payout arrangements on the 29k that is not covered by the sale.

I have never been late on my payments with any of my loans. I even offered to pay 3k to help cover the deficiency for closing but that is all I have in savings right now. I definitely want to avoid paying the 29k and want to see how I can avoid paying this deficiency. This is a HELOC 2nd and it was not used to purchase the loan. However, I probably have done more than 30k in improvements and repair during the course of the last few years and getting it ready to sell. That is why I got the 2nd.

What can I do now to get Wamu to not go after me? I don't want to hurt my credit with the deficiency. I realize the short sale doesn't help my credit but I absolutely have to sell b/c I cannot pay for 2 homes.

My agent is experienced with short sales but I am still nervous on the deficiency and potential collections aspect.

What can I do to get this waived/avoided? Thank you.

Bridget

snapple candy · 03-19-2009, 07:36 AM

Bridget,
This is what Moe posted previously about short sales. I think you need to consult an attorney. You are in a precarious position and need some professional advice on this one so you dont get screwed by WAMU:

Negotiating Deficiency is Key when atempting a short sale:

With a short sale, the lender has three possible ways to handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home.

First, the lender can attempt to collect the deficiency balance from the seller after the property has closed.

Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt.

Third, the lender may agree to cancel the entire deficiency balance.

You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection.

It is wise to consult with an Attorney or Real Estate Agent who is familiar with Short Sale negotiation and has significant experience working with lenders. Keep in mind that Attorney’s fees or Realtor fees come out of the lender’s net proceeds, therefore, you should not have to pay out of your own pocket for an Attorney or Realtor to assist you with the transaction.

Irish Gal · 03-19-2009, 03:57 PM

Hey Bridget,

I agree w/ Snapple that you need to consult an attorney. You have to be very careful in who you choose for a real estate agent as many pose as experienced in short sales, but aren't necessarily. The traditional real estate market is dead so agents are all now trying to make a buck anywhere than can. They are all now saying they are loan modification experts, short sale experts, home stagers, foreclosure, experts, your best friend (!), etc. IF you choose an agent vs. attorney, ask them for stats re how many short sales they have CLOSED successfully (w/ full release of all liability), not just handled. Personally, I would go with a real estate attorney who is also a real estate broker. The lender pays for it so you might as well go w/ the higher level of service (legal). I consulted a great one in so cal who was not pleased w/ how local real estate agents were handling short sales with their clients. He felt many agents were giving (incorrect) legal advice they had no business giving, and he stressed the importance of getting full release of all liability the right way (as you are seeking). Many agents have no clue what they are talking about (IMO). Many of them contributed to the mess many of us are in too. I'd rather an atty get the $$$$ than an agent

. And (like Snapple) I'm not a big fan of attys necessarily. I just dislike real estate agents more

. AND, a good lawyer is worth it. In the future, I won't sneeze w/out consulting a lawyer first

. Good luck.

Irish Gal · 03-19-2009, 04:01 PM

P.S. I don't think Moe lurks in this thread much. He is extremely busy these days and I haven't seen him comment on most threads for a long time. Just an FYI.

emeselle · 04-20-2009, 10:46 AM

I am nearing the end of my short sale. In order to close, Countrywide is stating that the owner of the loan requires that I sign a promissory note for $15k or come up with $7k cash to cover a portion of their loss. My question is, can CW still come after me for the remainder of the balance? The difference between the selling price and what I owe is over $100k.

I have the $7k (although it's wiping out my savings) and would much rather pay this than sign the note. The short sale approval letter is a little unclear to me. I still need to talk to my realtor, but I thought maybe you folks might have some insight for me in the meantime.

Moe Bedard · 04-20-2009, 11:30 AM

You would need to ask these questions of either your realtor...........but better than that, you may want to consult and ask your questions of a real estate attorney familiar with the deficiency laws of your state............you can retain them for a half hour or an hour........or they may just be able to answer your questions in a phone consult.

needhelp-GA · 04-23-2009, 07:09 AM

Hello. I'm in GA, a recourse state. I thought it would be in our best interest to attempt a short-sale so that the HELOC would get some money and be less of a judgment or forgiveness for the 1099-C. I will not sign a promisory note.

Right now, we have a low-ball offer, but the buyer does expect to have to pay more when the bank counteroffers (if they counteroffer). Since the 2nd is a HELOC and the low-ball covers absolutely none of it, it is likely they will just decline altogether.

As far as a deficiency judgment goes, are we better off with a short-sale (if lender approved), or are we better off just letting it foreclose?

It is possible that we are insolvent and can do a 982 form, but I have to get BPO's, etc. to prove we don't have assets in either of our two homes. The home approaching foreclosure is our primary home, but our HELOC isn't protected under that law.

Thank you in advance for your experienced opinions.

Moe Bedard · 04-23-2009, 07:32 AM

see post right above yours............you have questions that would need to be answered by an attorney.

needhelp-GA · 04-23-2009, 07:52 AM

Thank you. I guess we'll continue with the short-sale process. Then if the bank actually offers an agreement, we'll hire an attorney to look at it to make sure we aren't getting in a worse situation.

Thanks for the input.

rgzing · 05-08-2009, 02:57 PM

Chase called today and said that if the short sale is approved I might have to sign a promissory note for the deficeintcy. I am unemployed and I have nothing of value. I have sold all assets trying to keep from foreclosure until my home sold. So I sign a pomissory not what is be problem it is as good as the paper it is written on. Which is not any better than what is in my bathroom. 18 months of hell has brought me to a point where I will do anything just to get out. Then pick up the pieces afterwards. I would rather bankrupt after I have all the summary judgements, promissory notes, debt collectors all coming after me for a set amount than have them pop up after things are done, discharged and over. Am I crazy? What do you do 50 years old and everything I have worked for is gone in 18 months. I feel there is nothing else to lose. Every crook, underhanded attempt to take more away has come after me. Loan motificartion or DIL "professionals" wanting $7k to assist. Attorney for the HOA charging $5k for collection fee. HOA charging $6k in one month for late fees and a total so far over $10k, Chase wanting a promissory note of $100k, on and on. The fees are going to be close to $100k before this thing is over. Sad part is Chase was given $30 billion in tax payers money. Seems as though they are making out like a champ. Getting tax money and home owners into a pomissory note for shortage. Now I am suppose to be concerned? I am drained, broke, broken, and so lost that I have no more fight, no more energy. 18+ months of begging, jumping through hoops, credit counseling, and more. Here I am just finish this and I will fight another day. Living in a friends basement, mowing yards, cleaning houses, with 1000 resumes sent out. When I come back it will be with a vengence and I will have my day.

HopingtoFind · 05-08-2009, 06:13 PM

It is negotiation... if you were in your situation I would explain to them what you have explained here.. although I would be nice about it, just let them know what the facts are...which is you don't have much of anything to take and prices are still declining so they have to lot more to lose... and if they do not agree to short sale without promisory note for deficiency you will let the house go to foreclosure.. it is up to them to decide.

theylive · 06-16-2009, 06:20 PM

I've had my condo on the market and were trying to work a short sale listed at $39,900 (paid $110k) I have an 80/20 both w/CW or BOA and my biggest concern is a DJ. Being that Florida is a recourse state, I have heard more times than not that the lender will not negotiate and I'll be on the hook for the difference. Even if the lender does except a short sale and comes after me for the deficiency, am I better off not excepting the short sale and try to do a deed in lieu of foreclosure and get cash for keys? And how does the negotiation process work? Am I going be negotiating with an indian in India that I can't understand and won't be able to speak to the same person twice?

Moe Bedard · 06-17-2009, 06:20 AM

You may want to speak to a bankruptcy attorney. A short sale may be worse than BK and just walking away. Definitely speak with a qualified attorney.

aurers · 06-24-2009, 05:55 PM

I have missed 1 month of mortgage payments and am currently working with a Realtor to proceed the short sale process when B of A denied me for a loan modification. I have 2 loans with B of A (1st and 2nd were used to purchase my condo in the SF Bay Area). I have been reading about deficiency judgments and came across an article that stated that California has anti-deficiency statutes. One of the statues states that if the loan is obtained to purchase a residential 1-4 unit dwelling all or part of which is owner occupied and the loan is secured by that property, the lender may not obtain a deficiency judgment against the defaulting borrower. This loan is entitled to "purchase money" protection. (Cal. Code Civ. Proc. § 580b.) Note, however, that should the buyer refinance the home, the new loan is no longer “purchase money.” Thus, the buyer would lose the protection against a deficiency judgment in the event of a default.

In this event, is it still advisable for me to hire a lawyer, or am I okay just working with my realtor? Please advise.

Moe Bedard · 06-24-2009, 10:26 PM

aurers,

The California Code 580b is a valuable resource and you should definately consult with an attorney and have them review your docs to check your qualifications under this law to see if you are protected from any deficiency.

08-17-2008, 10:48 AM	#1 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Negotiating Deficiency is Key in a Short Sale Negotiating Deficiency is Key when atempting a short sale: With a short sale, the lender has three possible ways to handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home. First, the lender can attempt to collect the deficiency balance from the seller after the property has closed. Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt. Third, the lender may agree to cancel the entire deficiency balance. You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection. It is wise to consult with an Attorney or Real Estate Agent who is familiar with Short Sale negotiation and has significant experience working with lenders. Keep in mind that Attorney’s fees or Realtor fees come out of the lender’s net proceeds, therefore, you should not have to pay out of your own pocket for an Attorney or Realtor to assist you with the transaction. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

08-20-2008, 10:22 PM	#2 (permalink)
Enrique Member Join Date: Jul 2008 Location: Brentwood 94513 Posts: 18	Re: Negotiating Deficiency is Key in a Short Sale Moe, I've hired a lawyer to help me with the negotiation of the settlement of the debt. I didn't know that the lender would pay for this. How does this work? I was expecting him to send me a bill. Enrique

08-21-2008, 04:56 PM	#3 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Re: Negotiating Deficiency is Key in a Short Sale Hello Enrique, This can be billed to escrow when the home sales as a cost of selling the home and listed on the final closing statement ie: HUD. It depends on how your billing is set up with your lawyer. Maybe he is billing you in advance on fees? Hopefully, it's taken out at the sale. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

08-21-2008, 08:23 PM	#4 (permalink)
Enrique Member Join Date: Jul 2008 Location: Brentwood 94513 Posts: 18	Re: Negotiating Deficiency is Key in a Short Sale Thanks Moe. I'll have to look more into how to get the lender (BofA) to foot that bill. I've already forked out $1000 to the lawyer. Mabye I can get reimbursed. I have another question for you. In your post about short sales you say "You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection." I am right at this crucial step in my short sale and I feel much uncertainty. The bank's offer to me for both the 1st and HELOC is to agree to release the lien and charge off the remaining debt as a collectable balance. Is this the situation you are talking about... that they are not forgiving the personal debt? They're giving me until 9/12/2008 to sign the agreement or the offer ends. -- Unsure and somewhat confused __________________ Declined a short sale with BofA... now just walking away...

08-23-2008, 10:32 AM	#5 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Re: Negotiating Deficiency is Key in a Short Sale No problem Enrique!! My pleasure. Yes, this is what I am talking about (release of lien in exchange for a new personal debt). If you sign this they may be able to go after you for this balance which may include wage garnishments. Your attorney hopefully will do his due diligence and properly advise you to your rights. Best of luck! __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

09-07-2008, 10:04 PM	#6 (permalink)
Enrique Member Join Date: Jul 2008 Location: Brentwood 94513 Posts: 18	Re: Negotiating Deficiency is Key in a Short Sale Well my lawyer sent a letter to each BofA department, one for the 1st and one for the HELOC. This was 2 weeks ago and there's been no response. I don't think they are going to settle the debt. I've pretty much lost hope for a short sale with BofA. It is very frustrating. :-( __________________ Declined a short sale with BofA... now just walking away...

10-10-2008, 09:55 PM	#7 (permalink)
ShortinPA Member Join Date: Jul 2008 Posts: 17	Re: Negotiating Deficiency is Key in a Short Sale Enrique, I am in your same exact situation. Would you please post as to how you are doing, and what has happened the past month with your Bank of America situation? Much appreciated! -ShortinPA

02-05-2009, 02:31 PM	#8 (permalink)
Enrique Member Join Date: Jul 2008 Location: Brentwood 94513 Posts: 18	Re: Negotiating Deficiency is Key in a Short Sale I didn't post what happened, but I mentioned it in another thread the other day. Basically, my lawyer wrote BOFA asking for clarification on what their intent was in their offer to me. BOFA never responded so I didn't feel confident in signing the letters. I am thinking now that I should have because I'm still in a tough spot with taxes due in April... I think I'm either going to walk away or attempt another short sale. __________________ Declined a short sale with BofA... now just walking away...

02-26-2009, 10:32 AM	#9 (permalink)
sirkjeff Member Join Date: Dec 2008 Posts: 23	Re: Negotiating Deficiency is Key in a Short Sale Moe, Thanks for the site, I called country wide about doing a short sale. Ive been trying to sale the property in florida for over 2 years. it is consider a second home. Do you know of any attorneys in Tampa ? That can help with the short sale?

02-26-2009, 12:26 PM	#10 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Re: Negotiating Deficiency is Key in a Short Sale sirkjeff, You would need to go the the Florida Bar Association attorney referral for a Real Estate attorney.............. or www.naca.net __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

03-18-2009, 10:18 AM	#11 (permalink)
Bridget Ann Member Join Date: Mar 2009 Posts: 7	Re: Negotiating Deficiency is Key in a Short Sale Hi Moe, I have just received approval on a short sale with Washington Mutual. I had to move and I was trying to sell my house for a year and now it is finally going through at the end of this month. However, on the approval it says that Washington Mutual will accept $125k on the 2nd. Then the seller will need to contact the Recovery Department to work out payout arrangements on the 29k that is not covered by the sale. I have never been late on my payments with any of my loans. I even offered to pay 3k to help cover the deficiency for closing but that is all I have in savings right now. I definitely want to avoid paying the 29k and want to see how I can avoid paying this deficiency. This is a HELOC 2nd and it was not used to purchase the loan. However, I probably have done more than 30k in improvements and repair during the course of the last few years and getting it ready to sell. That is why I got the 2nd. What can I do now to get Wamu to not go after me? I don't want to hurt my credit with the deficiency. I realize the short sale doesn't help my credit but I absolutely have to sell b/c I cannot pay for 2 homes. My agent is experienced with short sales but I am still nervous on the deficiency and potential collections aspect. What can I do to get this waived/avoided? Thank you. Bridget

03-19-2009, 07:36 AM	#12 (permalink)
snapple candy Senior Member Join Date: Feb 2009 Posts: 1,247	Re: Negotiating Deficiency is Key in a Short Sale Bridget, This is what Moe posted previously about short sales. I think you need to consult an attorney. You are in a precarious position and need some professional advice on this one so you dont get screwed by WAMU: Negotiating Deficiency is Key when atempting a short sale: With a short sale, the lender has three possible ways to handle the deficiency balance, which is the portion of the mortgage debt not covered by the sale of the home. First, the lender can attempt to collect the deficiency balance from the seller after the property has closed. Second, the lender may require the seller to sign an unsecured promissory note for the deficiency balance as a condition of agreeing to the short sale. If the new note is for less than the balance of the original debt, the difference would be considered canceled, or forgiven, debt. Third, the lender may agree to cancel the entire deficiency balance. You must negotiate for the release of both the property lien and the underlying personal debt secured by the note. If you fail to do this, the lender may not forgive the personal debt and it will become a collection. It is wise to consult with an Attorney or Real Estate Agent who is familiar with Short Sale negotiation and has significant experience working with lenders. Keep in mind that Attorney’s fees or Realtor fees come out of the lender’s net proceeds, therefore, you should not have to pay out of your own pocket for an Attorney or Realtor to assist you with the transaction.

03-19-2009, 03:57 PM	#13 (permalink)
Irish Gal Senior Member Join Date: Mar 2008 Posts: 604	Re: Negotiating Deficiency is Key in a Short Sale Hey Bridget, I agree w/ Snapple that you need to consult an attorney. You have to be very careful in who you choose for a real estate agent as many pose as experienced in short sales, but aren't necessarily. The traditional real estate market is dead so agents are all now trying to make a buck anywhere than can. They are all now saying they are loan modification experts, short sale experts, home stagers, foreclosure, experts, your best friend (!), etc. IF you choose an agent vs. attorney, ask them for stats re how many short sales they have CLOSED successfully (w/ full release of all liability), not just handled. Personally, I would go with a real estate attorney who is also a real estate broker. The lender pays for it so you might as well go w/ the higher level of service (legal). I consulted a great one in so cal who was not pleased w/ how local real estate agents were handling short sales with their clients. He felt many agents were giving (incorrect) legal advice they had no business giving, and he stressed the importance of getting full release of all liability the right way (as you are seeking). Many agents have no clue what they are talking about (IMO). Many of them contributed to the mess many of us are in too. I'd rather an atty get the $$$$ than an agent . And (like Snapple) I'm not a big fan of attys necessarily. I just dislike real estate agents more . AND, a good lawyer is worth it. In the future, I won't sneeze w/out consulting a lawyer first . Good luck.

03-19-2009, 04:01 PM	#14 (permalink)
Irish Gal Senior Member Join Date: Mar 2008 Posts: 604	Re: Negotiating Deficiency is Key in a Short Sale P.S. I don't think Moe lurks in this thread much. He is extremely busy these days and I haven't seen him comment on most threads for a long time. Just an FYI.

04-20-2009, 10:46 AM	#15 (permalink)
emeselle Junior Member Join Date: Oct 2008 Posts: 3	Re: Negotiating Deficiency is Key in a Short Sale I am nearing the end of my short sale. In order to close, Countrywide is stating that the owner of the loan requires that I sign a promissory note for $15k or come up with $7k cash to cover a portion of their loss. My question is, can CW still come after me for the remainder of the balance? The difference between the selling price and what I owe is over $100k. I have the $7k (although it's wiping out my savings) and would much rather pay this than sign the note. The short sale approval letter is a little unclear to me. I still need to talk to my realtor, but I thought maybe you folks might have some insight for me in the meantime.

04-20-2009, 11:30 AM	#16 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Re: Negotiating Deficiency is Key in a Short Sale You would need to ask these questions of either your realtor...........but better than that, you may want to consult and ask your questions of a real estate attorney familiar with the deficiency laws of your state............you can retain them for a half hour or an hour........or they may just be able to answer your questions in a phone consult. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

04-23-2009, 07:09 AM	#17 (permalink)
needhelp-GA Member Join Date: Mar 2009 Posts: 22	URGENT HELP - suppose to sign short sale offer Hello. I'm in GA, a recourse state. I thought it would be in our best interest to attempt a short-sale so that the HELOC would get some money and be less of a judgment or forgiveness for the 1099-C. I will not sign a promisory note. Right now, we have a low-ball offer, but the buyer does expect to have to pay more when the bank counteroffers (if they counteroffer). Since the 2nd is a HELOC and the low-ball covers absolutely none of it, it is likely they will just decline altogether. As far as a deficiency judgment goes, are we better off with a short-sale (if lender approved), or are we better off just letting it foreclose? It is possible that we are insolvent and can do a 982 form, but I have to get BPO's, etc. to prove we don't have assets in either of our two homes. The home approaching foreclosure is our primary home, but our HELOC isn't protected under that law. Thank you in advance for your experienced opinions.

04-23-2009, 07:32 AM	#18 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Re: Negotiating Deficiency is Key in a Short Sale see post right above yours............you have questions that would need to be answered by an attorney. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

04-23-2009, 07:52 AM	#19 (permalink)
needhelp-GA Member Join Date: Mar 2009 Posts: 22	Re: Negotiating Deficiency is Key in a Short Sale Thank you. I guess we'll continue with the short-sale process. Then if the bank actually offers an agreement, we'll hire an attorney to look at it to make sure we aren't getting in a worse situation. Thanks for the input.

05-08-2009, 02:57 PM	#20 (permalink)
rgzing Member Join Date: Nov 2008 Location: Louisville Posts: 5	Re: Negotiating Deficiency is Key in a Short Sale Chase called today and said that if the short sale is approved I might have to sign a promissory note for the deficeintcy. I am unemployed and I have nothing of value. I have sold all assets trying to keep from foreclosure until my home sold. So I sign a pomissory not what is be problem it is as good as the paper it is written on. Which is not any better than what is in my bathroom. 18 months of hell has brought me to a point where I will do anything just to get out. Then pick up the pieces afterwards. I would rather bankrupt after I have all the summary judgements, promissory notes, debt collectors all coming after me for a set amount than have them pop up after things are done, discharged and over. Am I crazy? What do you do 50 years old and everything I have worked for is gone in 18 months. I feel there is nothing else to lose. Every crook, underhanded attempt to take more away has come after me. Loan motificartion or DIL "professionals" wanting $7k to assist. Attorney for the HOA charging $5k for collection fee. HOA charging $6k in one month for late fees and a total so far over $10k, Chase wanting a promissory note of $100k, on and on. The fees are going to be close to $100k before this thing is over. Sad part is Chase was given $30 billion in tax payers money. Seems as though they are making out like a champ. Getting tax money and home owners into a pomissory note for shortage. Now I am suppose to be concerned? I am drained, broke, broken, and so lost that I have no more fight, no more energy. 18+ months of begging, jumping through hoops, credit counseling, and more. Here I am just finish this and I will fight another day. Living in a friends basement, mowing yards, cleaning houses, with 1000 resumes sent out. When I come back it will be with a vengence and I will have my day.

05-08-2009, 06:13 PM	#21 (permalink)
HopingtoFind Senior Member Join Date: Oct 2008 Posts: 556	Re: Negotiating Deficiency is Key in a Short Sale It is negotiation... if you were in your situation I would explain to them what you have explained here.. although I would be nice about it, just let them know what the facts are...which is you don't have much of anything to take and prices are still declining so they have to lot more to lose... and if they do not agree to short sale without promisory note for deficiency you will let the house go to foreclosure.. it is up to them to decide.

06-16-2009, 06:20 PM	#22 (permalink)
theylive Senior Member Join Date: Feb 2009 Location: Florida! Posts: 35	Re: Negotiating Deficiency is Key in a Short Sale I've had my condo on the market and were trying to work a short sale listed at $39,900 (paid $110k) I have an 80/20 both w/CW or BOA and my biggest concern is a DJ. Being that Florida is a recourse state, I have heard more times than not that the lender will not negotiate and I'll be on the hook for the difference. Even if the lender does except a short sale and comes after me for the deficiency, am I better off not excepting the short sale and try to do a deed in lieu of foreclosure and get cash for keys? And how does the negotiation process work? Am I going be negotiating with an indian in India that I can't understand and won't be able to speak to the same person twice?

06-17-2009, 06:20 AM	#23 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Re: Negotiating Deficiency is Key in a Short Sale You may want to speak to a bankruptcy attorney. A short sale may be worse than BK and just walking away. Definitely speak with a qualified attorney. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

06-24-2009, 05:55 PM	#24 (permalink)
aurers Member Join Date: Jan 2009 Posts: 24	Re: Negotiating Deficiency is Key in a Short Sale I have missed 1 month of mortgage payments and am currently working with a Realtor to proceed the short sale process when B of A denied me for a loan modification. I have 2 loans with B of A (1st and 2nd were used to purchase my condo in the SF Bay Area). I have been reading about deficiency judgments and came across an article that stated that California has anti-deficiency statutes. One of the statues states that if the loan is obtained to purchase a residential 1-4 unit dwelling all or part of which is owner occupied and the loan is secured by that property, the lender may not obtain a deficiency judgment against the defaulting borrower. This loan is entitled to "purchase money" protection. (Cal. Code Civ. Proc. § 580b.) Note, however, that should the buyer refinance the home, the new loan is no longer “purchase money.” Thus, the buyer would lose the protection against a deficiency judgment in the event of a default. In this event, is it still advisable for me to hire a lawyer, or am I okay just working with my realtor? Please advise.

06-24-2009, 10:26 PM	#25 (permalink)
Moe Bedard Founder Join Date: Aug 2007 Location: Southern California Posts: 16,685	Re: Negotiating Deficiency is Key in a Short Sale aurers, The California Code 580b is a valuable resource and you should definately consult with an attorney and have them review your docs to check your qualifications under this law to see if you are protected from any deficiency. __________________ Moe Bedard Founder LoanSafe.org "America's #1 Home Loan Forum" LoanWorkout.org "America's # Loan Modification Blog" Get My FREE Loan Modification E-Book \| Please donate to LoanSafe.org \| Loan Modification Training For Attorneys \| Rate Your Mortgage Servicer The comments by me and the materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. Most of the information you find here is easily available on the internet. You should contact your attorney to obtain advice with respect to any particular issue or problem. The opinions expressed at or through this site are the opinions of the individual author and may not reflect the opinions of the firm or any individual attorney. Please Read our Privacy Policy and Legal Disclaimer Here.

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